Elon Musk says SpaceX has acquired xAI as part of a plan to move large-scale artificial intelligence computing off Earth and into orbit.
In a memo published on SpaceX’s website, Musk says the deal brings xAI inside SpaceX with the explicit goal of developing space-based data centers powered by constant solar energy, a concept he believes is necessary to keep AI scaling without straining Earth’s power grids and infrastructure.
The Information reports that SpaceX shelled out $250 billion to acquire xAI. Musk founded xAI in 2023 and is known for developing the generative AI chatbot Grok.
In the memo, Musk notes that terrestrial data centers are a near-term bottleneck for AI development, citing growing electricity demand, cooling constraints and environmental tradeoffs. He says space offers a cleaner and ultimately cheaper alternative.
“Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment.”
Musk’s plan centers on deploying massive constellations of satellites that function as orbital data centers, using Starship to lift unprecedented amounts of hardware into orbit.
“With launches every hour carrying 200 tons per flight, Starship will deliver millions of tons to orbit and beyond per year, enabling an exciting future where humanity is out exploring amongst the stars.”
According to Musk’s estimates, launching one million tons of satellites annually, each generating roughly 100 kilowatts of compute power per ton, would add about 100 gigawatts of AI compute capacity per year. Over time, he claims this could scale to terawatt-level output, surpassing what is practical on Earth.
“My estimate is that within 2 to 3 years, the lowest cost way to generate AI compute will be in space. This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity.
This new constellation will build upon the well-established space sustainability design and operational strategies, including end-of-life disposal, that have proven successful for SpaceX’s existing broadband satellite systems.”
He also ties the project to longer-term ambitions, including lunar manufacturing, space-based resource extraction and expanding AI infrastructure beyond Earth orbit.
Musk’s move comes amid expectations that SpaceX is slated for a mega IPO this year at a $1.5 trillion valuation. ARK Invest said that a public listing could pave the way for SpaceX to realize its Mars ambitions.
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